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8 Powerful Truths About Diversity and Inclusion

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Many business leaders want to make their organizations more diverse and inclusive but are stymied by the complexities of the challenge. Eight principles can help guide their efforts.

The majority of today’s business leaders know that diversity and inclusion are critical to performance. In Deloitte’s 2017 Global Human Capital Trends report, two-thirds of the 10,000 leaders surveyed cited diversity and inclusion as “important” or “very important” to business. Yet despite knowing the value of diversity and inclusion, many executives don’t know how to close the gap between aspiration and reality.

Business leaders seeking to foster a diverse and inclusive culture can consider the following fundamentals, which emerged in work with 50 organizations around the world representing more than 1 million employees, and also draw on the findings of several major research studies.

Diversity of thinking is the new frontier. Leading companies typically take a more holistic view of diversity, looking beyond demographic parity to the ultimate outcome—diversity of thinking. This is not to say that demographic characteristics such as gender and race are not important areas of focus; it’s still critical for organizations to eradicate discrimination and enable workers to reach their full potential. But there is a horizon beyond this. Diversity of thinking, or cognitive diversity, refers to educational and functional diversity, as well as diversity in the mental frameworks that people use to solve problems. Research shows that diversity of thinking is a wellspring of creativity, enhancing innovation by about 20 percent. It also enables groups to spot risks, and smooths the implementation of decisions by creating buy-in and trust. However, optimal diversity of thinking cannot be achieved without a level playing field for all talent—an area where there is clearly still work to be done.

Diversity without inclusion is not enough. Diversity and inclusion are separate concepts with equal importance. Yet many organizations are unclear about what inclusion means, which can lead to miscommunication, difficulties evaluating progress, lack of accountability, and simply counting diversity numbers as a default. Deloitte’s research reveals that a holistic definition of inclusion comprises four related yet discrete elements: being treated equitably and with respect; feeling valued and belonging; feeling safe to speak up without fear of embarrassment or retaliation; and feeling empowered to grow and do one’s best work. Clearly, these elements can be critical for diversity of thinking to emerge. When organizations are clear about the objective they can then turn their attention to the drivers of inclusion, take action, and measure results.

Inclusive leaders can cast a long shadow. Deloitte’s research shows that the behaviors of leaders can drive up to 70 percentage points of difference between the proportion of employees who feel highly included and the proportion who do not. This effect is even stronger for minority group members.¹ Furthermore, an increase in individuals’ feelings of inclusion improves perceived team performance by 17 percent, decision-making quality by 20 percent, and collaboration by 29 percent.² What distinguishes many highly inclusive leaders from their counterparts? Six signature traits: commitment, courage, cognizance of bias, curiosity, cultural intelligence, and a collaborative mindset. Inclusive leaders commonly alter their behaviors and the surrounding workplace to suit the needs of diverse talent, ideas, customers, and markets.

Middle managers matter. While change should be driven from the top, the middle manager cohort can be vital to the success of an organization’s diversity and inclusion strategy. A one-size-fits-all approach to delivering information, shaping experiences, and setting boundaries likely will not work. Senior leaders can influence middle managers in a variety of ways, including using storytelling to engage them emotionally, having open conversations that allow for questions and concerns to be voiced, and exposing them to influential role models and powerful experiences that enable them to walk in someone else’s shoes.

Rewire the system to rewire behaviors. It is likely more realistic to think about reducing the impact of biases rather than eliminating them, but even that is a challenge if biases are unconscious. Diversity training can be an important first step in raising awareness about the nature of biases and how they work, but truly changing people’s behavior often requires organizations to adjust the system. Strategies that rewire the system can make it easier to control biases and create a more comprehensive and sustainable solution.³ These include using data to pinpoint leaks in the talent lifecycle, identifying and remodeling vulnerable moments in that lifecycle, introducing positive behavioral nudges, and tracking diversity and inclusion data to assess the effectiveness of changes made.

Tangible goals make ambitions real. Goals for diversity and inclusion are often bluntly crafted and poorly communicated. Many organizations’ objectives overemphasize diversity and underemphasize inclusion, accountability, recognition, and rewards. To make their efforts more effective, leaders can create tangible goals that incorporate both diversity and inclusion, and communicate those targets clearly. Key decision-makers can make themselves accountable for the goals; doing so can signal the importance of diversity and inclusion as a business priority and helps focus people’s attention. Last, organizations can combine their efforts with broader acts of recognition and reward, highlighting successes and also calling out leaders who have poor diversity and inclusion track records.

Match the inside and the outside. Customer diversity and inclusion often have been overlooked, with the lion’s share of attention devoted to employee diversity. Deloitte’s 2017 research reveals that up to one in two customers from minority groups believed their customer needs often had been unmet over the past 12 months. Meanwhile, customers increasingly communicate what they stand for with their wallets and social media shares. Deloitte research found that up to one-half of customers had been influenced to make a purchasing decision in the past 12 months because of an organization’s support for equality—whether around issues of marriage, gender, disability, age, or culture. The purchasers did not come only from the groups directly targeted by the message; they included anyone who felt the message of equality had spoken to their personal values. While many organizations have prioritized workplace diversity ahead of customer diversity, both are equally important to business success. A word of caution, however: Marketing efforts that lack authenticity could alienate the very customers they seek to attract.

Perform a culture reset, not a tick-the-box program. Companies frequently underestimate the depth of change required, adopting a compliance-oriented or programmatic approach to diversity and inclusion.⁴ For many organizations, change requires a culture reset—no simple task, especially when the objective is an inclusive culture. Resistance is common: Those who are currently successful are likely to believe the system is based on merit,⁵ and change to the status quo can feel threatening. Consequently, change toward greater inclusion probably requires more effort than many other business priorities. Significant progress likely will not happen until organizations go beyond tick-the-box programs and invest the appropriate level of effort and resources.

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Many business leaders believe the business case for diversity and inclusion but feel ill-equipped to tackle the challenge. Keeping the above truths in mind, leaders can recognize that progress requires a culture overhaul. They can broaden the narrative to include diversity of thinking and inclusion. They can build inclusive leadership capabilities, take middle managers on the journey, and nudge behavioral change by rewiring processes and practices. They can strengthen efforts to create accountability, recognition, and rewards, and look to their employees and customers for inspiration. The journey likely won’t be easy, but it can be critical to an organization’s success in the coming years.

—by Juliet Bourke, partner, Consulting, Deloitte Australia

1. Findings from a Deloitte Australia analysis of inclusion measures (fairness and respect, value and belonging, inspiration, and confidence) based on a survey of 4,100 respondents in four organizations.
2. Based on a Deloitte Australia analysis of 105 leaders as assessed by 600 raters against the six signature traits of inclusive leadership and performance outcomes.
3. Iris Bohnet, “What Works: Gender Equality by Design,” (Harvard University Press, 2016); Iris Bohnet and Jeni Klugman, “Behavioural insights & gender equality,”VicHealth Promotion Foundation, Melbourne, Australia, May 1, 2017.
4. Bersin by Deloitte, “High-Impact Diversity and Inclusion,” 2017.
5. Australia Male Champions of Change and Chief Executive Women, “In the Eye of the Beholder: Avoiding the Merit Trap,” 2016.

8 Powerful Truths About Diversity and Inclusion

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